tv First Business KICU June 19, 2013 4:00am-4:31am PDT
the waiting game: traders and investors await clarity from fed chair ben bernanke on when the fed will end its stimulus strategy. in today's cover story, the housing recovery has arrived. now, find out how to potentially make money off housing stocks. plus, why women who are pregnant say employers are delivering a host of problems in the workplace. and, big hearts: why americans are digging deeper to give to charity. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning! it's wednesday, june 19th. i'm angela miles. in today's first look: the federal reserve takes
center stage with its policy decision due out today as investors and traders worry if the fed is ready to exit left with its bond-buying program. yesterday's stock market action appears to show the fed will continue to stimulate the economy. the dow soared 138 points, the nasdaq up 30 and the s&p by 13. gold sold off as oil gained. in the after-hours session, shares of lay-z-boy and adobe both initially rallied on earnings news. adobe beat estimates, but the future is in question. facebook will be out with its new big idea tomorrow. a new way to show photos or videos is highly suspected. and treasury secretary jack lew is giving up his loopy signature for a more traditional one he will use to sign banknotes starting this fall. larry shover of sfg alternatives joins us for trader talk. good to have you on the show this morning larry, and i am wondering how you are preparing for this fed day. - the way i am preparing today is just keeping the powder dry.
clearly the smarter money - not to say that i am, but the bigger, smarter money - has been on the sidelines really for the past two to three weeks. a lot of big moves we have seen have been just dramatically done by hedge funds, futures, and fast money. so, i am keeping the powder dry. - it's easy to forget the other market movers that are happening. oil has been moving on tensions in syria for instance. - absolutely. and against that is the lack of asian demand. but it seems like the middle east is winning right now in oil. - what about japan's economy? we have some data coming in from japan. will that be a market mover? - it could very well be a market mover. let's keep in mind that's where most of the volatility in the market started from, with the fixed-income volatility, the stock market volatility. so, really, it has been giving birth to all the other volatility around the country. so, it's going to be a market mover if it's something dramatic, one way or the other.
- and yet it's curious that gold has not been a huge safe haven, larry. why is that? - i think the reason gold dropped yesterday is really the numbers that came out yesterday in japan were pretty good. so it lost some of its safe-haven status. also, the u.s. numbers that came out yesterday, the inflation numbers, the housing numbers, just made the whole fomc atmosphere a little bit less clear. so people just shedding the safe haven asset. - good to have you on the show. thanks larry. - thank you. in our cover story, the fed is keeping close watch on the housing market - in particular new construction starts, which picked up nearly 7% last month: a good sign for builders, buyers, and those looking toward housing-related stocks. housing starts in may went up 6.8% overall - 3/10 of that new construction of single-family homes, but up 21.6% for new apartment buildings. "right now, their mindset is 'build-to-rent.' that's it." why so many apartments? lending for houses is still tight, with rising mortgage rates. banks see apartments as safer bets and easily convertable. "they're condo-ready. nice
finishes so when the market turns, they'll sell them to the people they're renting them to." another reason why such a small uptick for houses: demand, especially for those mega- subdivisions far from downtown. "people don't want to live 50 miles from work anymore. where there are close-in lots, there aren't that many of them." regardless what's being built, it still needs furniture and appliances. robert goldsborough at morninstar watches an exchange-traded fund of housing-related companies called spdr s&p homebuilders. "it has risen very well for the past year, plus. i think the homebuilding space is a good place to be for some time to come." but the speed of the housing
recovery is still open for debate. "if banks can make more money with loans, it will become a source of growth. if rates went up, they'd have more money to lend to borrowers." as for a sign of future demand, requests for building permits for single-family homes rose 1.3%, the highest level since may of 2008. the head of the national security agency delivers details in secret today to a congressional committee about exactly how the agency stopped a plot to blow up the new york stock exchange. yesterday, on capitol hill, general keith alexandar revealed how his agency has worked to foil terrorist plans by using survillience. "these programs, together with other intelligence, have protected the u.s. and our allies from terrorist threats across the globe, including helping prevent potential terrorist attacks over 50 times since 9/11."
the nsa was recently criticized after former nsa contractor edward snowden released top- secret documents on u.s. surveillance security. the nsa director says the disclosures will have a long and irreversible impact on the security of the u.s. and its allies. leaders of the g8 are stressing the need to fight tax evasion. at this week's summit, world leaders agreed to a more transparent system in which governments exchange tax information freely. signing on to the plan will fight against individuals and corporations that hide money in order to dodge taxes. the news comes as high profile clothing designers dolce & gabbana await a verdict over allegations of tax evasion. the designers deny those allegations. they will attend a hearing today. the g8 is also calling for urgent peace talks to end the conflict in syria. it's an active week of protests. in brazil, demonstrators staged raging protests against higher prices on bus fare, as well as crime,
corruption and overspending to build the world cup stadiums. in turkey, dozens of people were arrested in ongoing anti- government protests. meanwhile, in europe, the auto market continues to suffer after sales hit a 20-year low. demand in may dropped, especially in italy, germany and france. however, britain was a rare bright spot, reporting sales are up 11%. telsa will attempt to supercharge sales this week with a battery swap demonstration. telsa ceo elon musk said on twitter a battery pack swap demo will happen thursday at their design studio in hawthorne. the quick swaping out of batteries is to prove to critics that electric cars can run fine on long road trips. tesla shares rallied on the news, closing above $100. boeing is going long. the jet- maker confirms it will build a stretched verison of its 787 dreamliner. although the dreamliner had battery issues that grounded flights this year, boeing claims to have 102 orders for the new aircraft. the 787-10 will seat 330 passengers - that's 40 more seats than the
original dreamlers' capacity. the orders are worth an estimated $29 billion. chrysler has agreed to recall nearly 3 million jeep suvs. u.s. regulators say the older models, dating back as far as 1995, are in danger of catching fire in rear-end collisions. chrysler had originally refused to enact the recall, saying the cars were too old to be held up to the level of scrutiny brought by the regulators. eli lilly's schizophrenia drug zyprexa is being investigated by the fda after the deaths of two patients who received the drug. the drug already carries what's called a "black box" warning that alerts users to possible side effects. one such possibility is "delirium sedation syndrome," which can happen if the drug enters the bloodstream too fast. health insurer aetna apparently sees the state of california as a pre-existing condition. the insurance giant says it will no longer sell individual policies in california. 50,000 current
policy holders will need to find new coverage by january. aetna has already said that it won't participate in california's insurance exchange program as part of the affordable care act reforms. elan is "on the market." royalty pharma is taking its hostile bid for the irish drug company off the table. elan put itself up for sale after royalty made an agressive push to buy the company for four months. after shareholders voted for a stock buyback, royalty withdrew its appeal with regulators. with possible blockbuster drugs in the works, elan's shareholders felt royalty's bid was undervalued. layoffs are underway at a smithfield foods plant in virginia. the pork producer reportedly will close the portsmouth plant by mid august. 120 workers are losing jobs in the latest round of cuts of 400 employees who work there. smithfield is shutting the facility where hot dogs and deli meats are made because of changes in technology. a chinese company is set to buy
smithfield foods for $4.7 billion. sprint is suing dish network and clearwire. it's an attempt to block dish from taking over clearwire. sprint owns the majority of clearwire, but wants it all. sprint contends that deal violates shareholder rights that are protected by clearwire's charter. last week, clearwire's board reportedly recommended that investors sell shares to dish instead of sprint. billionaire hedge fund manager daniel loeb is upping his stake in sony. he's turning up pressure on the congolmerate company to spin off its entertainment division from its tech business. leob's third point hedge fund upped the number of shares to 70 million, or 7% of sony, with a stock value around $1.4 billion. according to the wall street journal, loeb wants sony to spin off 20% of its film and music business as an ipo. its a busy month for ipos. pasta chain noodles and company says it plans to raise $75 million at $13-$15 a share. it's expected to price in next week. and digital coupon company retail me not has filed for a $230 million ipo as the e-
commerce sector starts to heat up. it plans to trade under the ticker "sale." and gogo, which provides wifi for airplanes, plans to raise $176 million and is expected to price in late this week between 15 and 17 dollars. starbucks customers will soon know what is in their venti frappachino. the company will post calorie info for drinks and food at its stores by the end of the month. the fda will require chains with 20 or more locations to disclose certain nutrition info by the end of the year. the stock hit a record high yesterday. the numbers are out that detail charitable giving for the past year, and the news is encouraging: up 3.5% to a total amount given of more than $316 billion. it's individuals, not corporations, that do the bulk of the giving, making up almost 80% of all donations. the corporate sector did increase its giving last year by 12.2%. lisa deetlin is a charitable and philanthropic advisor who
tells us that giving is a sign of how well the economy is doing. "experts say it is indicative of the economy improving, especially in the corporate sector with corporate donations. that had the largest increase of any of the sectors here with over a 12% increase." lisa also told us that past surveys have shown that more than half of individual donations made come from households with incomes below $100,000. still to come, breaking up is hard to do. stick around for tips on splitting assests that could save your financial future. but first, why more expectant mothers say they are being forced out of the workplace. that's next.
you know there was a time when people like me couldn't live here. i'll never forget being told i wasn't welcome in this neighborhood. well i own this building now, the fair housing act made a difference for someone like me. so i can choose where i want to live, free from discrimination. glad you could make it, right this way... a new report highlights how moms-to-be are facing discrimination on the job. joining us now via skype, emily martin, vice president and senior counsel at the national women's law center. good morning to you, and what are some of the ways that pregnant ladies are feeling discriminated against at work? - in the report we are highlighting how 35 years after the pregnancy discrimination act passed, women are still being forced off the job when they need small, reasonable changes in their job duties or job rules, like avoiding heavy lifting for a few months or
having a stool to sit on instead of standing all day. too often employers are using those requests for reasonable accommodations as an excuse to fire women or push them out of the workplace on unpaid leave during their pregnancy. - what are those employers saying? what is their reasoning? - i think that a lot of employers think that they don't have an obligation to accommodate pregnant workers under law. we disagree with that. but there's a lot of employer misunderstanding and ignorance of the law. i think for a lot of employers, especially in low-wage industries, there is just a culture of saying no to an employee's request if the employer thinks that it can. so part of what we are doing with this report is trying to make clear what workers' legal rights are. - what needs to happen here to fix the situation? - a few things. first, the equal employment opportunity commission needs to issue clear
guidance, so employers understand their obligations to make accommodations for those pregnant workers who need them. and congress should pass the pregnant workers fairness act, which is a bill that would make unmistakably clear that pregnant workers have a right to reasonable accommodations on the job, just like employees with disabilities do. we just want to have equal treatment for pregnant workers. - quickly, before you take off, is this a prevalent problem, or is this a small minority of women? - we hear this story over and over again, especially for women who are working in more physically demanding jobs and jobs traditionally held by men, like police officers and firefighters. it's a story that we are hearing again and again. - good to have you on the show this morning. thank you. - thank you. coming up, break-ups typically break the bank. next, find out some uncommon divorce practices that could save your money. that's next.
"who gets to keep the house?" is a popular question posed in divorce cases. but the better question to ask is, how do you shelter money from the irs when selling the house? divorce attorney gemma allen of ladden and allen is on set with us this morning. welcome back to the show. - hi, thank you. - what are ways people can shelter their money from the irs when selling homes in cases of divorce? - well, there is a capital gains exclusion that is up to $500,000 for a couple. even divorcing spouses can gang up on
the irs with each other, and, since they would each have a $250,000 exclusion separately, they can agree how to allocate it and how to shelter that money co-jointly, even though they might not want to do other good things for each other. - in order to get that tax break, is it better to sell the house before you divorce and file, or after? does it matter? - not necessary. it doesn't matter. it's a clear set of regulations. if you fall within those regulations, you've got the exclusion. - while we have you on set this morning, a lot of people are talking about rupert murdoch and his big divorce from wendi deng. we believe there was a prenup signed here, correct? - yes. i think as much as an outsider can say so, i would say absolutely. - do you think it will go through smoothly, this divorce? - wow. that's a much bigger question, but there's a lot at stake. there are two children they have together, there's a family dynasty, there's the prenup, which you want more than the prenup, i understand, are a couple of postnups. stay tuned. - as we are understanding, her children do not have voting rights to the company. do you think that has something to do
with this case? - i do. i think that whenever you have that much power and money at stake, that could be the cause of the divorce, or it could have been the cause of someone looking elsewhere for love. - why do i feel like this is going to become vicious? - it has all the potential. think of it, fox news. think of it, rupert murdoch. think of it, money. when you think of big money and you think of big power and big egos and age differences, and a beautiful younger woman, you've got it all. - or a reality tv show. - well, it is. it's going to be reality in and of itself. - unbelievable. good to have you on the show this morning. thank you for helping us out today. - thank you. still ahead, fed day trades with trader andrew keene are after the break. chart talk is next.
traders. what will be your positioning on this fed day? - this is very interesting to me. we have seen this so many times. i have been trading for about a dozen years. this reminds you of the greece situation, where greece is going to get bailed out, then it isn't, then it is, then it isn't. they're talking about tapering. are the government and bernanke going to hint at tapering? i think what they are going to say at today's meeting is that they are not going to taper right now, but they are going to look at it in the next two to three meetings. there will be a tapering at some point, but i think it is going to happen after september. there are going to be very, very, key words that are going to be looked at. i think the market is going to rally on it. over the last two days, the market has rallied on it. one way of playing the market going to rally is by shorting the vxx. it's the volatility etn, and i am short it right now. i am short it through a call spread. currently it's trading $20.07. if the market rallies, volatility will get hit hard. if bernanke says they are not going to taper at all at this
meeting, not only will the market rally, but volatility is going to get hit, because a lot of uncertainty will be out of the market. so the level to the downside i'm looking at is $19.50, and then i think it can get to recent lows of $18 in the vxx. i have a stop above $22. - why short the volatility index now, though? especially because we have had so much volatility. - we have had volatility, but we have had volatility because they are talking about this tapering. it's just like earnings. you hear stuff before earnings, volatility is really high before earnings. after the announcement, the volatility gets crushed because there is no more uncertainty. so, when bernanke speaks, if the market rallies, the vxx and volatility will get crushed. if the market kind of stays stagnant and doesn't move that much, volatility is still going to get crushed because uncertainty is going to be out of it as well. so the only way the vxx and the vix is going to go up is if the market gets absolutely crushed and rolls over. we are already up 45 points from 1600. we're trading 1647. so i don't really think the vxx can go above that $21.40, which is the recent highs. - it's good to have you on the show. thank you, andrew. - thank you. that's a wrap for now. coming up tomorrow, predictions on how muni bonds are set to perform. plus, will any of the films opening at the box off this weekend have the power to stop
superman? from all of us at first business, thank you for watching! >> announcer: the following is a paid presentation for the nuwave oven pro, brought to you by the makers of the nuwave precision induction cooktop. [♪.. professional chefs create great-tasting meals from years of experience and by using professional equipment. and now you can too, with the nuwave oven pro, the number-one countertop oven in america! no more defrosting or preheating that giant oven-- the nuwave cooks all your meals faster, better, healthier and easier, guaranteed. the nuwave oven is not a microwave oven, but uses conduction, convection